Telecom Italia (TIM) announced the resignation of its CEO Luigi Gubitosi following a board meeting held to discuss the EUR 10.8 billion takeover offer launched by US investment fund KKR. In a statement, TIM said the current chief executive of its TIM Brazil unit, Pietro Labriola, has been appointed general manager to “ensure the absolute continuity and stability of company management”, with current chairman Salvatore Rossi taking on Gubitosi's remaining powers, including responsibility for managing TIM's assets and activities of strategic importance for the national defence and security system.
According to an earlier report, Gubitosi offered to step down ahead of the board meeting on the grounds that he did not wish to stand in the way of the board’s consideration of KKR's offer. In that regard, TIM announced plans to set up a special committee made up of Rossi and four independent directors to examine the content of KKR’s “non-binding indication of interest” with the support of the advisors it will appoint for the purpose.
In addition, TIM's nominations and remunerations committee is working with headhunters Spencer Stuart to define “a stable and lasting medium-term executive leadership of the company” taking into account the evolution of TIM's share ownership structure and its scope of activities.
Gubitosi, TIM’s fourth CEO in six years, stepped down after a clash with TIM’s biggest investor Vivendi, which earlier this month requested an extraordinary meeting to discuss strategy following the operator's recent profit warnings. He was re-elected as CEO for a second three-year term in April with the backing of Vivendi and CDP, but has seen his plans to merge TIM’s fixed line assets with those of wholesale rival Open Fiber frustrated by the apparent lack of interest shown by Mario Draghi’s unity government.
TIM said Gubitosi will stay on as a director, meaning Labriola, who will continue as head of TIM Brasil, cannot yet join the board and be appointed CEO, although unnamed sources cited by Reuters indicated that he may well take on that position in the future. The report adds that Gubitosi sent a letter to the board criticising directors for stalling on KKR's offer to please some shareholders.
KKR’s non-binding offer, which amounts to over EUR 33 billion including TIM’s debt pile, remains conditional on the outcome of a four-week due diligence analysis as well as on the government’s backing. According to an earlier Bloomberg report, KKR sought and received the approval of Draghi before going public with its offer, whose success could depend on the US fund’s plans for TIM’s broadband network.
